Feds deny railroad's request to sell Michigan lines

KALAMAZOO -- Norfolk Southern Corp. won't be offloading its Michigan railroad lines, after a decision by the federal government today.

The Surface Transportation Board today denied a proposal by Norfolk Southern and Kansas short-line operator Watco Cos. Inc. to form a joint venture that would operate nearly 300 miles of Michigan track.

"Because of all the time we spent addressing the concerns (of affected parties), the decision today is a disappointment," Norfolk Southern spokesman Rudy Husband said.

The proposed joint venture, Michigan Central Railway LLC, has been controversial since it was announced in July.

Many observers were concerned about its possible impact on Amtrak passenger rail service between Detroit and Chicago, which uses Norfolk Southern lines between Ypsilanti and Kalamazoo.

Husband said the economic conditions that led Norfolk Southern to seek a buyer for its Michigan lines have not changed. Michigan's sagging economy and the closure of automotive manufacturing plants have reduced demand for freight rail service.

"We're going to thoroughly review the decision and see what our options are," he said.

Officials at Pittsburg, Kan.-based Watco weren't immediately available for comment.